Oil and gas explorer GMX Resources Inc. (GMXR) late Monday reported a net loss for the second quarter compared to net income in the year-ago period, as a 2% increase in production was largely offset by lower crude oil and natural gas prices. The results for the latest quarter also include inventory writedowns and deferred income tax valuation allowance.
On an adjusted basis, the company reported a profit for the latest quarter. The company also said it signed a non-binding letter of intent for the sale of an interest in its Endeavor Pipeline assets to Kinder Morgan Tejas Pipeline LLC for $40 million.
For the second quarter, the Oklahoma-based company's net loss applicable to common stock was $9.32 million, or $0.51 per share, compared to net income of $10.90 million, or $0.74 per share, in the same period last year.
The results for the latest quarter include inventory writedown of $1.84 million, or $0.10 per share, deferred income tax valuation allowance of $7.91 million, or $0.43 per share, unrealized losses on derivatives of $680 million, or $0.04 per share, and bad debt expense of $321 million, or $0.02 per share.
On a non-GAAP basis, adjusted net income for the latest quarter was $1.43 million, or $0.08 per share. On average, fourteen analysts polled by Thomson Reuters expected the company to report a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.
The company said it did not recognize a full cost accounting impairment charge during the latest quarter due to an increase in natural gas and crude oil prices from March 31, 2009.
The company's oil and gas sales for the latest quarter declined 40% to $22.84 million from $38.04 million in the year-ago period, and missed analysts' consensus revenue estimate for the quarter of $23.12 million.
The company attributed the decline in oil and gas sales for the quarter to a 2% increase in production that was largely offset by lower crude oil and natural gas prices. Income from operations for the quarter dropped to $4.86 million from $20.88 million a year ago.
GMXR's production during the quarter was 3.31 Bcfe, compared to 3.25 Bcfe in the year-ago period. On a sequential basis, production increased 3% from the preceding first quarter.
Production of oil during the quarter decreased 34% to 33 MBbls from 50 MBbls for the year-ago period, while natural gas production for the quarter increased 5.6% to 3,113 MMcf from 2,949 MMcf in the previous-year quarter.
The company said that natural gas prices realized in the quarter averaged $6.54 per thousand cubic feet or Mcf, 41% lower than the $11.03 per Mcf realized in the year-ago period. The company's average realized oil prices in the quarter declined 30% to $75.88 per barrel from $108.10 per barrel in the same period last year.
The company spent a total of $41.9 million in Capital expenditure during the second quarter, representing a decrease in capital expenditure of 41% from $70.5 million in the preceding first quarter.
For the first six months of fiscal year 2009, GMXR reported net loss applicable to common stock of $134.91 million, or $8.03 per share, compared to earnings of $15.99 million, or $1.14 per share, in the year-ago period.
Adjusted net income available to common shareholders for the latest period was $2.13 million or $0.13 per share.
Oil and gas sales for the half year dropped to $45.66 million from $65.24 million in the same period last year.
For the second half of fiscal year 2009, the company expects to have capital expenditures of about $45.0 million, a 60% reduction from the first half of 2009.
Of the remaining capital expenditures for the full year, $34.0 million is related to drilling and completing H/B horizontal wells, $6.0 million is related to rig termination and lay down fees, and $5 million is related to leasehold and infrastructure costs.
The company said its current 2009 one rig CAPEX budget is estimated at $157 million. The company forecasts production for the year in the range of 13.5 Bcfe-14.5 Bcfe, with third-quarter production between 3.3 Bcfe and 3.6 Bcfe.
In addition, the company said it has signed a non-binding letter of intent to sell an interest in its Endeavor Pipeline assets to Kinder Morgan Tejas Pipeline LLC for $40 million. The transaction is expected to close within 45 days. The company noted that the transaction will provide the capital required by it to add a second H&P FlexRig3 to its Haynesville/Bossier horizontal development program. The company also said that it on July 20, it received notification from the Securities and Exchange Commission, or SEC, that the SEC had no further comments after reviewing the company's responses to the SEC's comments that were originally received in January 2009, focused on certain aspects of the company's oil and gas reserves and production.
GMXR closed Monday's regular trading session at $12.49, up $0.86 or 7.39% on a volume of 0.55 million shares.
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